New York State Common challenges Tyson’s dual-share stock structure

New York State Common Retirement Fund, Albany, has filed a shareholder resolution with Tyson Foods Inc. asking the company to eliminate its dual-share stock policy because it unfairly protects top management from stock owners' interests.

"Tyson's voting structure denies shareholders' any meaningful oversight or input," said Thomas P. DiNapoli, New York State comptroller and sole trustee of the $226.4 billion pension fund, in an email statement. "Tyson should give each share an equal vote."

The resolution will be offered at Tyson Foods annual meeting Feb. 11, which will be held via webcast due to health concerns of the coronavirus pandemic. As of Dec. 31, the fund held nearly 480,000 shares of Tyson Foods shares worth about $31 million.

Springdale, Ark.-based Tyson opposes the resolution, which was included in its annual meeting proxy statement filed Dec. 23 with the Securities and Exchange Commission.

The dual-class stock structure "has insulated its board and management from having to answer for its failure to quickly address the impacts of the COVID-19 crisis," Mr. DiNapoli said in his email. "Investors have serious concerns about COVID-19 outbreaks among employees and closures of Tyson plants hurting the company's bottom line but lack the voting rights to weigh in on these significant issues."

The pension fund's resolution points out that Class A publicly traded shares — with one share having one vote — account for about 30% of the voting power. Class B shares — each share has 10 votes — account for about 70% of the voting power.

Tyson LP — an assortment of Tyson family member trusts — holds 99.99% of Class B shares, according to the annual meeting proxy.

"Without equal voting rights, Class A shareholders cannot hold management and the board accountable, resulting in entrenchment," the resolution said. "This entrenchment has insulated our company from having to answer for its failure to quickly address the impacts of the COVID-19 crisis."

The pension fund resolution said Tyson should hire an investment banking firm "to make appropriate recommendations" to establish a one-shareholder/one-vote structure.

The company, writing in the annual meeting proxy, opposed the proposal. "Every investor purchasing a share of our Class A common stock is made aware of the dual class structure," the company wrote. "We believe many are attracted to our stock because of the long-term stability that the Tyson Limited Partnership, our controlling shareholder, and the Tyson family have provided to the company for many decades."